Fifth high school planning delays could cost millions

While Irvine Unified School District staff and board members evaluate and compare two sites proposed as locations for the district’s fifth comprehensive high school, they are aware that delaying the choice of where to build for even a few months could increase the project’s construction costs by millions of dollars.

The school district is battling the clock to open the planned high school by September 2016, by which time the district has projected enrollment will increase by over 7,000 students. For four hours at last week’s school board meeting, district staff and consultants provided information on the hidden costs associated with either delaying a decision on the school’s location or choosing one site over the other.

Their analysis: a premature choice could cost the district as much as $500,000 in lost application fees, a delay in decision could cost developers millions of dollars in construction expenses and jeopardize the amount of state reimbursement they receive, and a change in the planned location could render $2 million worth of designs useless.

LAST-MINUTE CHOICE

The school district has been planning its fifth comprehensive high school for six years and, in 2011, signed a mitigation agreement with the Irvine Co. and FivePoint Communities to finance construction and provide land for a new school, respectively. The agreement called for the school to be built on 40 acres sitting east of the Orange County Great Park (now known as Site A) unless another location of equal or better value was officially offered.

Since then, the district has designed the school with the assumption that it would be built at Site A. But that expectation proved premature when the Irvine City Council voted unanimously last month to offer 40 acres inside the western edge of the Great Park for sale to FivePoint for at least $60 million, to be considered by the district as a second proposed location for its fifth high school – Site B.

The proposal sent the school district scrambling to expedite analysis of the second site. Not only was the district unsure of the pros and cons of Site B, but it did not fully understand the costs and impacts that would accompany delaying the school’s construction for a year – a near certainty if the district opted to change its planned location.

What advantages did Site B offer? Could Site A designs be easily transferred to the second location? What were the monetary and programmatic costs of delay? And, most important, would moving the school opening back a year be worth the change in location?

Analysis of both sites is ongoing; a clear winner has yet to be chosen.

COSTS OF DELAY

Architectural approval: To close on the site and begin construction, the school district must have its school designs approved by the Division of the State Architect. The application is accompanied by a $762,000 check. If the district decides to submit an application for one location and then changes to another, it will lose $533,000 of that fee. The district has determined the latest it can submit the application without jeopardizing its opening date is in mid-November.

Energy efficiency code: California schools designed after 2013 must adhere to stricter energy efficiency standards. According to district staff, the code change would require the district to change its designs for how it plans to cool the fifth high school, and the new cooling system would cost an additional $10 million. This cost would likely be passed on to developers.

Rising construction costs: As the housing marking rebounds, costs for construction labor and materials are increasing, said Lloyd Linton, Irvine Unified’s director of construction services and facilities planning. Under current projections, if the district delayed the school’s construction for a year, that increase could add up to approximately $4.5 million. Again, these costs would likely be absorbed by developers.

Lost designs: The district reported it has spent $4.2 million in design and engineer fees to date. If the district opts to build at Site B, it estimates at least $2 million worth of site-specific designs would be made useless.

State reimbursement: Though FivePoint has given land for the high school and the Irvine Co. has agreed to finance the construction, both expect to receive state money the district gets to reimburse it for building a new school. But the current state bond that pays for a portion of school construction costs has run dry, and if Californians vote to pass a new bond measure in November 2014, it is unclear what reimbursement it would provide. School districts across the state are already applying for the funds the bond would provide, and the line could get long enough that the funds area already spoken for before the bond is passed.

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